Chips shortage to paralyze car industry even in China
The global chip shortage continues to paralyze the car industry. Audi Brussels halted production until the end of next week as the latest example. And in China, the Association of Automobile Manufacturers (CAAM) is warning auto chips in circulation are close to depletion. That ends the Chinese brands’ advantage in chip resources, they say.
American consulting firm AlixPartners adjusted its 2021 prevision for the loss this chip shortage could cause the industry to over 210 billion dollars, double of its May report. The shortage and the COVID-19 pandemic combined will cause 7,7 million fewer cars to be made in 2021.
Not all bound by joint-ventures
Especially local Chines brands managed to increase their market share during 2021. That was partially related to their chip sourcing situation, said Li Shaohua, deputy secretary-general of the CAAM, in an interview with the Securities Times.
Experts say that most foreign car brands producing in China are bound by joint ventures that are part of a global procurement system and generally adopt stable and long-term procurement agreements. Once the supply of automotive chips is cut off, they can only take measures to reduce or suspend production.
An early warning
Chinese auto companies will do everything possible to find resources to ensure production, Li adds. “Nevertheless, we still need to give an early warning. Now that the resources of automobile chips are nearly exhausted, the next step is that the advantages of Chinese car brands in chip resources are no longer obvious, and relevant companies need to prepare in advance.”
And often there is no escape for Chinese carmakers too, as illustrated by NIO, which was confronted by a Covid-19 outbreak in Malaysia affecting chip production at STMicroelectronics, a supplier of Bosch ESP, thus affecting Bosch’s supply to NIO.
1,8 million NEVs produced
According to the figures of CAAM, in August 2021, China’s auto production and sales reached 1,725 million and 1,799 million units, respectively. That’s a decrease of 18,7% and 17,8% compared to the year before.
Nevertheless, the so-called ‘new energy vehicle market’ with all electrified cars included was booming, reaching in the first eight months of 2021 a production total of 1 813 000 units, and 1 799 000 in sales. That’s 1.9 times the volume of the year before.